Samsung Electronics Co. Ltd. saw operating profits slide during the first three months of this year on weakness in the memory chip market, it said Friday.
The company, which is one of the largest manufacturers of the DRAM (dynamic RAM) chips used in computers and NAND memory chips used in consumer electronics devices, said net profit dropped 15 percent to 1.6 trillion won (US$1.7 billion). Sales rose 3 percent to 14.4 trillion won. “While operating profit came in slightly below market consensus, this shortfall was limited to weaker than expected performance in the semiconductor business,” said Lee Keonhyok of Samsung’s investor relations department in a telephone conference call. “While not making any excuses, it’s fair to say weak performance of semiconductors was reflected by a market wide decline in DRAM and NAND prices.”
Samsung’s semiconductor business unit saw sales climb 3 percent on the same quarter a year earlier but operating profits dropped by more than half to 540 billion won. “DRAM and NAND prices fell too sharply over the first quarter to be offset by our cost reduction efforts,” said Lee. He estimated that some of Samsung’s competitors were also being forced to sell chips at a loss to keep a share of the market. But looking ahead things are positive, said Kang Yeongho, vice president of Samsung’s semiconductor business. He said prices of NAND chips have been recovering since late February and DRAM prices are also expected to climb as demand rises.
Source: PC World